COUNTERTRADE EXAMPLES AND SUCCESS STORIES

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EXAMPLES OF BUYBACK TRANSACTIONS

LEVI STRAUSS AND THE GOVERNMENT OF HUNGARY DID A BUYBACK DEAL.

When Levi Strauss, the world’s largest maker of blue jeans, decided to expand its European operations, it began talks with the Government of Hungary. Hungary wanted to build a blue jeans plant but did not have enough hard currency to pay for it. The solution: Hungary bought equipment and expertise from Levi Strauss, and Levi Strauss agreed to buy back a share of the production. The company now takes 60 percent of the plant’s annual output, about one million pairs a year, which it sells in Europe and Africa.

Levi’s buyback agreement and variations on it, commonly called countertrades, are no longer isolated events. In fact, so many deals have been struck in the past three years that government officials, bankers, and industry analysts predict such commerce will account for 30 percent or more of all international trade.

A $750M ALUMINIUM PLANT set up WITH NO MONEY DOWN.

WTE helped a client set up a $750M Aluminum plant without any capital investment on the part of our client through a buy-back arrangement. In this buy-back arrangement, the supplier built the plant and also supplied alumina (an oxide of aluminum found in bauxite and clay) to our client. In exchange, the supplier of the aluminum plant and alumina agreed to buy back 20% of the finished aluminum produced at the plant over the following ten-year period as payment for building the plant.

A $500M COPPER ORE PROCESSING PLANT ACQUIRED WITH NO MONEY DOWN!

WTE helped a client to acquire a Copper Ore Processing plant worth $500 million with no money down. In exchange, the supplier agreed to buy back 25% of the plant’s production over the following fifteen-year period as payment.

A $2.5B ENGINE PRODUCTION LINE SET UP WITH NO MONEY DOWN.

A good illustration of a buy-back deal is the recent agreement between the Volkswagen Corporation and a German company. This agreement obliged VW to deliver a complete production line capable of producing 286,000 engines per year to the German company without the German company paying any money upfront. The cost of the production line and licensing agreements is to be paid through the delivery to VW of 100.000 motors per year.

a $235 MILLION METHANOL PLANT ACQUIRED WITH NO MONEY DOWN.

WTE helped a client to acquire a methanol plant worth $235 million with no money down. In exchange, the supplier of the Methanol plant agreed to buy back 25% of the plants’ production over the following fifteen-year period as payment. The client acquired the $235M methanol plan without capital and without going to any investors, banks, or financial institutions.

a $20b OCCIDENTAL PETROLEUM AMMONIA buyback deal.

An example of a buyback deal is the US $20-billion Occidental Petroleum ammonia transaction with a Russian company. Occidental assisted the Russians in financing and constructing ammonia plants and agreed to purchase quantities of ammonia produced by these plants over a twenty-year period. Several parties were involved in this buy-back transaction, and it involved investments (in the form of equity, capital equipment, loans, management, infrastructure support, and technology transfer). The suppliers financed the acquisition and construction. Brokers and switch traders were involved. Bankers acted as trustees of the fund until the final payment was made to the suppliers. WTE was not involved in this transaction.

$800 MILLION CEMENT-MAKING PLANT SET UP WITH NO MONEY DOWN.
WTE helped a client to acquire a cement-making plant worth $800 million with no money down. In exchange, the supplier of the cement-making plant agreed to buy back 10% of the plant’s production over the following 20 year period as payment.
A $500M BUYBACK DEAL SET UP WITH NO MONEY DOWN.
In one such buyback arrangement, the French engineering firm Technip agreed to supply two plants that would each produce 125,000 tons of benzene, 165,000 tons of orthoxylene, and 165,000 tons of paraxylene per year. As compensation for the equipment and licenses, the receiving company agreed to deliver annually for ten years 20,000 tons of orthoxylene and 20.000 tons of paraxylene plus variable quantities of related petrochemical products. The total value of the deal was $500 million.
ACQUIRED A $25 MILLION TOMATO PASTE PROCESSING PLANT WITH NO MONEY DOWN
WTE helped a client to acquire a $25 million Tomato paste processing plant without any capital investment by initiating, structuring, and facilitating a buy-back arrangement between our client and the seller of the tomato processing machine. The seller of a Tomato paste processing plant agreed to be paid through the export of canned tomato paste produced by the machine. The buyer of the processing machine ensured that sufficient quantities of canned tomato paste were exported to the seller as payment for the machine.
a $3.5b triangular ENERGY BUYBACK deal between ZIMBABWE, CONGO, AND CHINA.
Zimbabwe’s Hwange Colliery Company got Chinese investors to provide much-needed foreign currency to build power generators in return for coal concessions. Hwange will also supply an undisclosed tonnage of coal and coke in return for mining equipment.
Marketing and investor relations manager John Nkala said the coal mine and NORINCO had agreed to supply NORINCO smelters in the Democratic Republic of the Congo (DRC) with coal and coke. He said NORINCO had agreed to supply Hwange with Komatsu and Caterpillar earthmoving equipment.
The Zimbabwean power utility ZESA signed investment deals totaling $3.5B with China’s CATIC. CATIC has undertaken to expand Hwange 7 & 8 and Kariba 7 & 8 power stations in return for coal concessions.
A $250M BUYBACK DEAL SET UP WITH NO MONEY DOWN.
An example of the buyback deal is where two British firms, ICI and Davy Powergas, sold a methanol plant to a buyer for $250 million and agreed to be paid by buying back 20% of the plant’s production over the following ten year period.
A 10-YEAR GUARANTEED SUPPLY OF STEEL WITH NO MONEY DOWN!
WTE helped a shelving unit manufacturer receive a guaranteed supply of steel products for a 10-year period without spending cash through a buy-back arrangement. In this buyback transaction, the steel producer agreed to supply our client (the manufacturer of shelves) with steel, which is used to manufacture shelves without an upfront payment. In exchange, the steel producer agreed to buy back the shelves at a reduced price, paying the manufacturer of shelves with the raw steel. Put another way, the manufacturer of shelving units and systems paid the steel supplier with the shelves manufactured using steel.

COUNTERTRADE SUCCESS STORIES

$6.5B CASH INFUSION
Our client, one of the world’s largest oilfield services companies with operations in more than 80 countries received $6.5 billion for growth and expansion without debts or giving up equity in their company by using a buy-back + tolling + switch trading arrangement.
$2.4B DEBT REPAYMENT WITHOUT CASH.
Another client, a multinational energy corporation with operations in more than 150 countries, sidestepped their liquidity problems and paid off $2.4B debt without using cash, but using their products in the form of a tradable financial instrument, which was converted to liquid assets within 24 hours via a countertrade arrangement.
$1.8B ASSET SALES WITHIN 24 HOURS.
Our client, an American petroleum and natural gas exploration and production company, sold $1.8 billion worth of assets within 24 hours.
OIL REFINERY ACQUISITION AT ZERO COST.
Our client recently acquired a modular oil refinery for crude oil with a 20,000 BPD production capacity at zero cost via a countertrade + buyback + tolling + switch trading arrangement.
$75M PLANT CAPACITY UPGRADE AT ZERO COST. 
Our client, a steel manufacturing company, got their plant capacity upgraded with an investment of $75 million to increase their production capacity without depleting their cash reserves. 
60% COST REDUCTION. 
Our client, an industrial products manufacturer that manufactures a range of items — from driveline products to power technologies and service parts used zero-cost purchasing sources to reduce cash expenses by 60%, preserve cash and increase profits exponentially.
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CARL ICAHN TURNED $190M INTO $610M USING COUNTERTRADE.
Carl Icahn, the former chairman of Trans World Airlines, was owed $190 million from TWA. When it came time to pay the debt, the airline only had $100 million in the bank and could not pay. Icahn, a quick-thinking billionaire, adroitly negotiated a countertrade transaction, along with purchasing additional tickets at a steep discount. The total deal was $610 million in face-value airline tickets. Then he promptly opened a new company, Global Discount Travel Services, and began selling the tickets at a slight discount to more than recoup his $190 million.
TWA was a winner in this transaction as well. They canceled their $190 million debt obligation by providing tickets at a big discount, in addition to providing the seats. (Typically, a plane is 65% full, so some of the 35% empty seats—which can never be sold once the plane takes off—will be used to pay off their debt, and $190 million stays in the corporation.)

success stories of our clients.

success stories.
  1. A petroleum company acquired new facilities worth $3.5 billion within 30 days with no money down.
  2. A private jet charter company acquired 23 private jets worth $575 million with no money down.
  3. An industrial product manufacturer acquired new machinery, equipment, and turnkey production facility worth $578 million with no money down.
  4. A manufacturing company acquired a methanol plant worth $235 million with no money down.
  5. An oil company recently acquired a modular oil refinery for crude oil with a 20,000 BPD production capacity with no money down.
  6. Giovanni acquired a 123-year-old $250 million turnover company with 768 employees with no money down.
  7. A steel manufacturing company got its plant capacity upgraded with an investment of $75 million to increase its production capacity with no money down.

Success stories.

8. One client got over a billion dollars in real estate that cost them — absolutely nothing!

9. Another client got $850M worth of office building, company cars, with no money down.

10. One of our clients averaged an extra $750,000,000-a-quarter profit off their countertrade deals.

I could tell you a lot more and have your eyes jump out…but it would fill 1000 pages … and I’m sure you get the idea.

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